The world doesn’t want dollars. Who could blame them? For several years the Federal Reserve has been convincingly indecisive about what it wants to do.
We have the simmering conflict in Syria, unfinished business in Iraq and Afghanistan, Russia warming up to Iran and Turkey, China preparing for war with somebody or anybody, Saudi Arabia in disarray, and Donald Trump wanting to bring back the 1960s of Fortress America. What, me worry?
As of today, $1 will buy you 99.9 yen. The smaller that number the weaker the dollar is. Counterintuitively, countries do not want a strong currency. If your money is too strong, your citizens buy more stuff from other countries, and your exports become too expensive, causing your export businesses to become unprofitable. Tourism falls off as people can’t afford hotels and restaurants. The Yen and the Swiss Franc are historically the currencies people run to if they get scared of the dollar.
When the dollar gets weak, the price of oil goes up. The US Stock market looks cheap, so money sloshes in, having nothing to do with companies making stuff and earning profits. Everything is connected to everything else to the point nothing makes sense.